Applications for both home purchases and refinances rose last week, thanks in part to a drop in interest rates, according to the Mortgage Bankers Association (MBA).
The MBA released its Weekly Mortgage Applications Survey for the week ending March 4, showing that the Market Composite Index, a measure of mortgage loan application volume, increased 8.5% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the index increased 10% from the previous week.
The Refinance Index increased 9% from a week earlier, but was 50% lower than the same week last year.
The seasonally adjusted Purchase Index increased 9% from the prior week, while the unadjusted Purchase Index increased 11%. It was, however, 7% lower than the same week last year.
"Mortgage rates dropped for the first time in 12 weeks, as the war in Ukraine spurred an investor flight to quality, which pushed U.S. Treasury yields lower,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said. “A 6-basis-point decline in the 30-year fixed-rate mortgage led to a slight rebound in total refinance activity, with a larger gain in government refinances.”
Looking ahead, Kan said the potential for higher inflation amid disruptions in oil and other commodity supply chains “will likely lead to a period of volatility in rates as these effects work against each other."
He said the increase in purchase activity was a result of prospective buyers acting on lower rates and getting an early start on the spring buying season. “The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth," Kan said.
The refinance share of mortgage activity continued to decline, slipping to 49.5% of total applications from 49.9% the previous week, the MBA said. The adjustable-rate mortgage (ARM) share of activity also decreased, to 5.2% of total applications.
The FHA share of total applications ticked up to 8.7% from 8.6% the week prior. The VA share of total applications also rose, 10.4% from 10.2% the week prior, while the USDA share of total applications increased to 0.5% from 0.4% a week earlier.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 4.09% from 4.15%, with points remaining unchanged at 0.44 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.39% from 3.47%, with points decreasing to 0.46 from 0.47 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
MBA’s weekly survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100.
